Week Nov 30 2012 – Weekly Recap & The Week Ahead
“It wasn’t raining when Noah built the ark” — Warren Buffett
1. Euro zone, IMF secure deal on cutting Greek debt — per Reuter,Euro zone finance ministers and the International Monetary Fund clinched agreement on reducing Greece’s debt in a breakthrough to release urgently needed loans to keep the near-bankrupt economy afloat. Greece’s international lenders agreed on a package of measures to reduce Greek debt by 40 billion euros, cutting it to 124 percent of gross domestic product by 2020 and to reduce the debt pile, they agreed to cut the interest rate on official loans, extend their maturity by 15 years to 30 years, and grant Athens a 10-year interest repayment deferral.
2. Profits at Chinese firms provide more evidence of GDP recovery — profits at Chinese industrial companies jumped 20.5% on year in October to 500B yuan ($80.4B), with growth accelerating from a 7.8% rise in September and providing further evidence that the economy is rebounding.
3. Cyber Monday sales soar 26% — online retail sales jumped 26% from last year on Cyber Monday, IBM said late yesterday, adding that purchases from mobile devices, including tablets, rose 10.2%.
4. Italian 10-year yields fall to two-year low in auction — Italy has sold €2.98B of 10 year bonds at a yield of 4.45%, down from 4.92% in a previous auction and the lowest in two years, indicating how the market tumult over the eurozone debt crisis has somewhat subsided. The government also issued €3B of five-year paper at 3.23%, down from 3.8%. The total sale of €5.98B was at the top end of the government’s target of €4-6B.
5. Fed Likely to Keep Buying Bonds in 1Q 2013— per WSJ, frustrated with the lack of substantial job gains, many Fed officials want the bank to continue buying long-term Treasurys even after Operation Twist expires. The purchases would be in addition to the $40B a month of mortgage-backed securities that the Fed’s been scooping up.
6. Detroit on the Verge of Bankrupcy, Again — courtesy of WSJ, with 2-3 weeks to receive $30M of state aid from Michigan in order not to run out of cash, Detroit is again teetering on the brink of bankruptcy. The aid is contingent on the city implementing the provisions of a deal in April, when Michigan agreed to provide $137M, but those measures haven’t been enacted.
7. Indian FQ2 GDP slows to three-year low — India’s GDP growth declined to a three-year low of 5.3% on year in FQ2 vs +5.5% in Q2 and consensus of +5.2%. The slowing growth comes as the government battles to implement reforms that it sees as vital to reviving the economy.
The week ahead — Economic data from Econoday.com:
